Post Earnings Coverage as JA Solar Revenue Surge 51.9 Percent on Strong Demand from China

LONDON, UK / ACCESSWIRE / August 24, 2016 / Active Wall St. announces its post-earnings coverage on JA Solar Holdings Co., Ltd. (NASDAQ: JASO). The company announced its second quarter fiscal 2016 results on August 17th, 2016. JA Solar, one of the world’s largest manufacturers of high-performance solar power products, delivered solid growth in earnings and revenue for the second quarter, driven by strong shipments to its domestic market China. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the quarter ended on June 30, 2016, JA Solar reported net income of RMB 164.1 million, or $24.7 million, up from RMB 136.0 million, or $20.5 million, in the year-ago period. The company reported earnings of RMB 2.87, or ($0.43) per diluted American Depositary Share (ADS), higher than earnings of RMB 2.26 ($0.34) per (ADS) in the year-ago quarter. The posted adjusted earnings of $0.30 per ADS missed analysts’ consensus estimate of $0.59 per ADS. JA Solar’s net revenue surged 51.9% to RMB 4.1 billion, or $619.0 million on y-o-y basis; however it came in below the market expectation of $689 million.

Mr. Baofang Jin, Chairman and CEO of JA Solar, commented:

“Second quarter results were in-line with our expectations, with shipments and revenue growing over 50% year-over-year. We are also encouraged by our downstream project development achievements as we successfully connected approximately 250 MW of solar projects to the grid in the quarter. As expected, China was our strongest market in the quarter, driven by accelerated activity ahead of subsidy reductions that occurred this summer.”

Shipments Pulse

During Q2 FY16, JA Solar reported total shipments of 1,380.3 megawatts (“MW”) consisting of 1,229.3 MW of modules and cells to external customers, and 151.5 MW of modules to the company’s own downstream projects. External shipments were up 55.5% on y-o-y basis, driven by a 58.1% upside in module shipment as well as a 29.6 rise in cells and cell tolling. The increase in shipments came on the back of strong demand from China which constituted 63.9% of the Q2 FY16’s total shipment.

In Q2 FY16, shipments to America grew to 9.3% of the total shipment, significantly higher from 0.6% of the total shipment in the comparable year ago period. However, the company witnessed a sharp drop in shipments to Europe, which contributed 3.7% of the total shipments in the reported quarter, compared to 14.8% a year ago. Asia-Pacific (excluding China) markets also reported decline, with shipments representing 12% of the total shipment, compared to 31.9% in Q2 FY15.

Financial Position

As of June 30, 2016, JA Solar had a cash balance of RMB 2.0 billion ($303.0 million) and total working capital of RMB 1.1 billion ($162.2 million). The company reported short-term borrowings of RMB 2.8 billion ($426.6 million) and long-term borrowings were RMB 3.3 billion ($489.3 million), of which RMB 630.3 million ($94.8 million) are due in one year.

For Q2 FY16, the company posted gross margin of 15.3% compared to gross margin of 16.4% in Q2 FY15. Total operating expenses of $66.3 million represented 10.7% of revenues in the reported quarter compared to operating expenses of 10.6% of revenue in the year earlier period.

Warrants Gain

JA Solar reported that the change in fair value of warrant derivatives resulted in a gain of RMB 47.4 million ($7.1 million) compared to RMB 35.1 million ($5.3 million) in the year-ago quarter. The warrants had been issued in August 16, 2013 in conjunction with the company’s $96 million registered direct offering, and expired on August 16, 2016.

Outlook

For Q3 FY16, JA Solar is forecasting total cell and module shipments to be in the range of 1.2-1.3 Gigawatts (“GW”). For FY16, the company reiterated its previous guidance of 5.20 to 5.50 GW shipments, consisting of 250 to 300 MW of module shipments to its downstream projects.

Stock Performance

JA Solar’s stock was trading at $7.65, down 0.78% at the close of the trading session on August 23, 2016. A total volume of 311,540 shares changed hands for the day. The company’s share price has advanced 8.51% in the past one month and 13.00% for the past 12 months.

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